GobiMin Announces Results of 2010

(Expressed in United States dollars except where otherwise indicated)

TSX-V: GMN

TORONTO, April 19 /CNW/ - GobiMin Inc. (the "Company" or "GobiMin") reports its financial and operating results of 2010 and is pleased to announce the declaration of an annual dividend of $0.01 (CAD$0.01) per share.

The audited consolidated financial statements along with management's discussion and analysis will be filed with SEDAR (www.sedar.com) and will also be available at the website of the Company (www.gobimin.com).

Financial highlights

Year ended December 31, 2010 2009 2008

Revenue

$
-
$
0.9 million
$
21.4 million

Gain on deregistration/disposal of subsidiaries (1)

0.1 million 31.4 million -
Net (losses)/earnings (1) (2.2 million) 29.5 million 0.03 million
(LBITDA)/EBITDA (2) (3.4 million) 30.5 million 6.3 million
Basic (losses)/earnings per share (0.03) 0.43 0.00
Diluted (losses)/earnings per share (0.03) 0.42 0.00
(LBITDA)/EBITDA per share(2) (0.05) 0.44 0.09
       
Cash and cash equivalents and time deposit 38 million 78 million 54 million
Cash and cash equivalents and time deposit per share(2) 0.58 1.15 0.76
Working capital 53.6 million 84.1 million 65.2 million
Total assets 120.9 million 90.4 million 121.9 million
Annual dividend per share (3) 0.01 0.0125 0.01
Special dividend per share(3) - - 0.06

(1)      Net losses for the year 2010 take in account the deregistration of 4 subsidiaries. The net earnings for the year 2009 comprised also the gain on the disposal of the 2 operating subsidiaries in China.
(2)      As non-GAAP measurements, (LBITDA)/EBITDA, (LBITDA)/EBITDA per share, working capital and Cash and cash equivalents and time deposit per share do not comply with GAAP and, therefore, the amounts presented in the above table may not be comparable to similar data presented by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
(3)      The Company declared an annual dividend of $0.01 (CAD0.01) per share for 2010 in accordance with its dividend policy. For 2009, the Company paid an annual dividend of $0.0125 (CAD0.0125) per share based on 2009 annual performance. For 2008, the Company paid an annual dividend of $0.01 (CAD0.01) per share pursuant to its dividend policy and a special dividend of$0.06 (CAD0.07) per share following the disposal of the 2 operating subsidiaries in China.

Annual dividend

On April 19, 2011, the Company declared an annual dividend of $0.01(CAD0.01) per share in accordance with the Company's dividend policy. The dividend is payable on May 25, 2011 to shareholders of record on May 12, 2011.

Business Summary and Development

(a)     Gold Project in Xinjiang

The Company, through a wholly owned subsidiary, entered into an agreement with Xinjiang Baodi Mining Company ("Baodi") and a subsidiary of Brigade No. 2 of Xinjiang Bureau of Geology and Mineral Resources ("Brigade No. 2") to form a joint venture company, Xinjiang Tongyuan Minerals Ltd. ("Tongyuan"), in China to develop and operate the Sawayaerdun Gold Project in Xinjiang, China. GobiMin owns a 70% equity interest in Tongyuan while Baodi and Brigade No. 2 each own a 15% interest. Tongyuan has obtained the related mining license.

The main exploration works carried out this year include 33 drill holes with a total length of about 6,700 m and 33 trenches of approximately 1,350 m in the Zone IV, mostly in the northeastern portion of the zone. The Company has received a NI 43-101 technical report from Wardrop a Tetra Tech Company in March 2011 for the gold resources contained in the Zone IV within the Project, which can be viewed at www.sedar.com.  At a lower grade threshold of 0.5 grams/tonne gold, Zone IV is estimated to contain Indicated resources of about 34 million tonnes with an average grade of 1.3 grams/tonne gold (about 1,380,000 oz gold) and Inferred resources of about 13.5 million tonnes with an average grade of approximately 1.0 grams/tonne gold (about 424,800 oz gold).

In March 2011, there was a casualty reported at the site of the Gold Project due to an avalanche.  The Company has extended its sincere condolences and set aside an amount of compensation for the family of the deceased despite the fact that its responsibility was not engaged.  In order to avoid accidents in the future development and operation stages, the management has laid down additional stringent safety rules that should be followed by all staff at the site.

(b)     Coal Project in Xinjiang

On February 9, 2010, GobiMin acquired an indirect equity interest of 24.49% in the Balikun Coal Project in Xinjiang, China and participates in its management and operations.  GobiMin and its partner jointly have a controlling interest in the project through Xinjiang Ruide Mining Limited. According to a NI 43-101 Mineral Resource estimate prepared by Scott Wilson Ltd. in February 2010, the Balikun Coal Project hosts 38 million tonnes of coal in Measured Resources and 50 million tonnes in Indicated Resources. The power and water supply facilities have been installed and are in operation. The construction of a ventilation ramp with total length of 1,328 meters (2010 finished 568 meters) has been completed while the main ramp and an auxiliary ramp are approximately 30% and 40% completed respectively. Other achievements in 2010 include securing the sources of water, heating supply facilities, road for transportation and drainage system for underground construction and mining.

(c)     Silver Operations

GobiMin holds an equity interest of 49% in China Precision which engages predominantly in silver trading. China Precision buys physical silver ingots from producers and sells them directly to end consumers. All its positions are hedged and it is not exposed to market price movements. In order to increase the vertical spectrum of the silver business, China Precision has developed a downstream silver business by establishing a small processing workshop in Hong Kong for transforming the silver into more variety of product forms and sell to the industrial customers. To increase product variety and profit contribution, GobiMin will continue to source and explore new potential business opportunities in this sector.

(d)     Base Metals Exploration Projects in Xinjiang

GobiMin currently owns equity interests in 4 exploration joint ventures in Xinjiang, China for nickel, copper, gold, lead and zinc. During 2010, GobiMin has been exploring several copper projects which show good indications of copper mineralization. Some exploration licenses were relinquished by not applying for renewal or sold to third parties due to not having good prospect. The Company will continue to conduct pre-survey and exploration to identify potential mineralization.

GobiMin formerly owned a 40% indirect equity interest in another joint venture, Xinjiang Tongxing Minerals Limited ("Tongxing"), which is engaged in exploration and development of the Yanxi Copper Property. The Company entered into a Share Transfer Agreement on July 14, 2010 regarding the disposal of a company holding an 80% equity interest in Tongxing, among which, the Company disposed of its 32% interest in Tongxing. The transaction was completed on July 22, 2010 and GobiMin has received all the cash consideration and the first lot of convertible bonds. GobiMin currently retains an 8% indirect unlisted equity interest in the Yanxi Copper Property.

The Company has entered into a supplemental agreement with the buyer on December 30, 2010 to extend the deadline for obtaining the mining license of the Yanxi Copper Property (the "Yanxi Mining Licence") from December 31, 2010 to August 31, 2011.  According to the supplemental agreement, the consideration to be received upon obtaining the Yanxi Mining Licence is reduced by HK$21,000,000 to HK$259,000,000 due to the construction of a railway across the Yanxi Copper Property that has a negative impact on the minable quantity.  The final and total consideration for the disposal of the 80% indirect equity interest in Tongxing will accordingly be capped to HK$365,000,000. Based on the reduced consideration of $33.4 million (HK$259,000,000), the Company shall have an estimated deferred gain of $5.7 million for its disposal of the 32% equity interest in Tongxing, netting off the amount payable for the mining license fee, tax, stamp duty and related payments of $26.8 million.

(e)     Investment Opportunities

The Company ceased to have its substantial mining operations in Hami, Xinjiang of China following the disposal of two operating subsidiaries in February 2009. Given its healthy cash position, the Company will keep on searching for potential investment opportunities.

(f)     Normal Course Issuer Bid

On January 26, 2010, GobiMin has renewed its normal course issuer bid to repurchase up to an additional 3,412,865 common shares over a maximum period of 12 months ended January 31, 2011. The Company repurchased 3,412,865 common shares during the year. All shares repurchased were returned to treasury for cancellation. GobiMin has 65,890,837 shares outstanding as at December 31, 2010.

On January 4, 2011, GobiMin announced to renew its normal course issuer bid to repurchase up to an additional 3,294,541 common shares for a further one year. The normal course issuer bid will expire on January 31, 2012. Up to April 19, 2011, a total of 1,700,000 common shares were repurchased at an aggregate cost of $1,317,613 (CAD1,411,560).

All shares repurchased will be returned to treasury for cancellation. A copy of the related Notice of Intention to Make a Normal Course Issuer Bid shall be provided to shareholders upon receipt of written request to the Company at its registered office.

Chief Financial Officer ("CFO")

Ms. Joyce Ko has been the Interim Chief Financial Officer of GobiMin since May 2009 and is now formally appointed as CFO.  Joyce also occupies the function of the Vice President Corporate Affairs and Secretary of the Company.

Outlook

GobiMin continues to move forward with a healthy cash position.

The mining license of Yanxi Copper Property is expected to be obtained in 2011.  We plan to carry out the drilling work and the resource estimate of the New Area adjacent to the Yanxi Copper Property.  As the Company will be entitled to an additional consideration based on the resource estimate of the New Area, we will make every possible effort to explore the New Area to ensure that the Company can increase the total amount of consideration to be received.

The recently announced NI 43-101 resource estimate of Sawayaerdun Gold Project delivered impressive results of Zone IV. GobiMin will carry out a more comprehensive survey of Zone IV based on the existing geological information. We believe that the areas surrounding Zone IV also have good resources potential and will bring good news to shareholders once the exploration unfolds.

During the coming year, GobiMin will seek to increase the vertical and horizontal diversity of its metals trading business.  Besides transforming silver into a larger variety of product forms, our small processing workshop in Hong Kong will start refining silver. In addition to silver trading, the Company will also engage in trading other kinds of metals. GobiMin will continue to source and explore new potential business opportunities in China and overseas.

Certain statements contained in this press release constitute forward-looking information. Such statements are based on the current expectations of management of GobiMin. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause actual results, future circumstances or events to differ materially from those projected in the forward-looking information.  The reader should not place undue reliance on the forward-looking information included in this press release given that (i) actual results could differ materially from a conclusion, forecast or projection in the forward-looking information, and (ii) certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information could prove to be inaccurate. These statements speak only as of the date they are made, and GobiMin assumes no obligation to revise such statements as a result of any event, circumstance or otherwise, except in accordance with law.       

"Neither TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release."

To receive GobiMin press releases by email, send a message to info@gobimin.com and specify "GobiMin press releases" on the subject line


 

SOURCE GobiMin Inc.

For further information:

Felipe Tan, Chief Executive Officer    
Tel: (852) 3586-6500    
Email: felipe@gobimin.com

 

Profil de l'entreprise

GobiMin Inc.

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